How will the Jensen Huang incident reshape US-China relations?

BEIJING — U.S. Congress’s scrutiny of the former lingers Nvidia CEO Jensen Huang’s affair with a suspected Chinese spy has made already strained relations between the world’s two largest economies even more dangerous.

Nvidia’s Huang resigned Thursday and agreed to testify before Congress by Thanksgiving, Nov. 26. House Foreign Affairs Committee Chairman Brian Mast (R-Fla.) told reporters there may be “future hearings for other individuals and other matters.”

“I’m worried that this incident will dramatically worsen the mood in Washington towards China, as well as the issue of export controls and even the way the Trump administration deals with China,” said one Beijing-based foreign policy researcher, who requested anonymity because of the risk that academics would be disciplined or even fired if they spoke to the media.

Researchers warned that the situation could return to that of the 1990s, when a “Chinese-American” nuclear physicist faced federal prosecution for allegedly sharing nuclear secrets with the Chinese government. The court ultimately dismissed all but one of the 59 counts.

Bilateral relations, which have been sustained by a fragile trade ceasefire, now face new allegations of espionage. This time, it’s a story about a technology company executive who is at the center of the US-China competition over artificial intelligence.

“This isn’t really about Jensen,” said Mitch Presnick, non-resident emeritus fellow of the China economy at the Asia Society’s Center for China Analysis.

He noted that some in Washington favor China exclusion measures and disagree with the message from semiconductor executives that U.S. technology needs to be used in China to remain relevant in global technology development.

The US government began restricting Nvidia’s ability to sell advanced chips to China in 2022. However, the Trump administration eased many Biden-era regulations in 2025.

Meanwhile, NVIDIA’s Huang made his point across a wide range of markets, from the US to China, Taiwan and Germany.

In September, at the height of his influence, he shared a dinner with US President Donald Trump and Chinese President Xi Jinping at a summit in Washington, DC. The two presidents are next scheduled to meet on the sidelines of the APEC Summit to be held in Shenzhen, China, on November 18-19.

The Democratic Party won an overwhelming victory in the U.S. midterm elections on November 3, and the political situation rapidly changed due to the ensuing confusion over reports of Hwang being suspected of spying for China. Jensen Huang admitted to having an affair over the weekend.

It remains unclear whether sensitive information was shared.

China’s Ministry of Foreign Affairs claimed that the suspicion of being a “Chinese spy” is groundless and “slander against China.”

“The United States should stop fabricating stories of ‘Chinese spies’ as an excuse to impose technology regulations,” Mao Ning said Thursday, according to the official English translation.

But analysts expect the immediate outcome will be more U.S. restrictions that China doesn’t want.

“The Nvidia scandal has shattered the credibility of the largest lobbyists opposing U.S. export controls to China,” said Arthur Clover, a partner at Gabekal Dragonomics. “There is a good chance Congress will tighten these rules by the end of this year.”

Looking ahead, Kroeber warned that China could cut off supplies of rare earths and chip-making materials if the U.S. attempts to further restrict China through the MATCH Act or affiliate rules. The measures could limit Beijing’s access to key technology suppliers in the Netherlands and Japan, respectively, and significantly expand export controls to include many of its subsidiaries.

“So when President Trump and President Xi meet in Shenzhen next week, they will likely agree to maintain the fragile U.S.-China ceasefire,” Clover said. My anxiety is only increasing.

Pressuring China is a rare area of ​​bipartisan agreement in Washington. Meanwhile, since the US government restricted sales of NVIDIA’s advanced chips to China in 2022, the Chinese government has stepped up domestically produced alternatives to US technology. And even though President Trump has approved the sale of part of NVIDIA, it has yet to result in any meaningful orders from China.

George Chen, partner and chairman of the Asia Group’s digital practice, said on Thursday that “the two countries will start to divide again in terms of technology,” noting that “China will double down on its independence.”

“The Jensen Huang incident is starting to feel like another ‘reconnaissance balloon’ incident,” he said.

In early 2023, under the Biden administration, the United States shot down what it called a Chinese surveillance balloon. The Chinese government called it a weather balloon that went off course. However, as a result of the incident, then-Secretary of State Antony Blinken’s visit to China was delayed by more than four months, as his involvement was limited due to travel restrictions due to the novel coronavirus.

Returning to the fan incident, “the timing here is not a coincidence,” Presnick said. “We’re talking about a series of very strange coincidences. We’re also talking about the fact that the information came from an anonymous source and there were other strange things about it.”

Days after the U.S. midterm elections, the Financial Times and the New York Times reported, citing sources, that U.S. government intelligence agencies believe that China’s Ministry of State Security has recruited businesswoman Alice Huang to gather information about Nvidia’s then-CEO Jensen Huang.

“Obviously someone was trying to do this, and they wanted to have a discussion about espionage, not about American competitiveness,” Presnick said.

“The United States thinks in terms of the United States and China, but that’s not what China thinks,” he said, pointing to China’s trade with fast-growing non-Western countries in Africa and Southeast Asia.

—CNBC’s Samantha Subin contributed to this report.